EBS Advisory advises more than 100 General Partners (GPs) and Limited Partners (LPs) in implementing Environmental, Social and Corporate Governance (ESG) at various stages of the investment life cycle.
To maximise ESG returns on a fund level, it is important to develop a bespoke environmental and social management system (ESMS), with reporting requirements clearly articulated for individual portfolio companies. This system should be informed by the funds ESG strategy and should be aligned to reporting requirements outlined by LPs with the ultimate objective of maximising exit valuation and subsequent increased carry for the fund manager.
A funds demonstrated ESG expertise as it pertains to the assessment of potential investments is critical, articulated through the ability to undertake ESG due diligence exercises, closing out of environmental social action plans (ESAPs), regular reporting on ESG risk metrics and the defining of and reporting against ESG impact indicators. Defining the ESG risk metrics and ESG impact indicators to report on requires a clear demonstration of the outcomes the fund aims to achieve and their knowledge of material stakeholder requirements. This necessitates a clear mapping of fund inputs and portfolio company outcomes to ensure metrics being monitored are appropriate for measuring ESG performance. The ongoing tracking and review of the portfolio’s performance with respect to ESG, enables the fund to maximise ESG value creation within the portfolio and subsequently the ability to articulate this value created during exit.
EBS Advisory provides support to private equity fund managers during the various stages of the investment life cycle and are often appointed on a retainer basis, acting as inhouse ESG expert for the fund. EBS Advisory thus supports not only system design and implementation, but also in collection, analysis and reporting of ESG risks and value creation. Ongoing training and capacity building of the ESG teams on fund and portfolio level are also a focus area.